Module A Other Public Accounting Services

ACCT 4080 Module A 1

1. Assurance Services

       Risk assessment Business performance measurement Information systems reliability Electronic commerce Third party reimbursement maximization XBRL reporting Customer satisfaction surveys ACCT 4080 Module A 2

2. Compilation and Review

  Performed by an “accountant” Levels of assurance    Audit  positive assurance (reasonable assurance) Review  limited assurance (moderate) (negative) Compilation  no assurance (Disclaimer of Opinion)  Applicable standards    ACCT 4080 SSARSs (AR) SSARS No. 19 – 2010 SSARS No. 21 – new clarified standards will be effective in 2015   engaged to compile f/s engaged to prepare f/s Module A 3

2. Compilation & Review

(continued)  Compilation of financial statements  A service, the objective of which is to assist management in presenting financial information in the form of financial statements, information that is the representation of management without undertaking to obtain any assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework.

ACCT 4080 Module A 4

2. Compilation & Review

(continued)  To compile financial statements, the accountant should possess knowledge of the following:  general understanding of the nature of entity's industry and its business transactions     form of its accounting records stated qualifications of its accounting personnel applicable financial reporting framework form and content of the financial statements ACCT 4080 Module A 5

2. Compilation & Review

(continued)    Compilation procedures required  obtain engagement letter  understand entity‘s industry and business  read f/s looking for obvious accounting principle or accuracy errors  however, no responsibility to conduct audit procedures to gather any evidence about accuracy or completeness of f/s or to evaluate internal control Okay if not independent Okay if financial statements omit disclosures ACCT 4080 Module A 6

Accountant’s Compilation Report

We have compiled the accompanying balance sheet of Sample Company as of December 31, 2011, and the related statements of income, retained earnings, and cash flows for the year then ended. We have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or provide any assurance about whether the financial statements are in accordance with U.S. generally accepted accounting principles.

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the U.S. and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.

Our responsibility is to conduct the compilation in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The objective of a compilation is to assist management in presenting financial information in the form of financial statements without undertaking to obtain or provide any assurance that there are no material modifications that should be made to the financial statements.

ACCT 4080 Module A 7

2. Compilation & Review

(continued) 

Review of financial statements

 A service, the objective of which is to obtain limited assurance that there are no material modifications that should be made to the financial statements in order for the statements to be in conformity with the applicable financial reporting framework. ACCT 4080 Module A 8

2. Compilation & Review

(continued)  To review financial statements, the accountant should possess knowledge of the following    same as for a compilation, and general understanding of the entity's organization, its operating characteristics, and the nature of its assets, liabilities, revenues, and expenses also, general knowledge of the entity's production, distribution, and compensation methods, types of products and services, operating locations, and material transactions with related parties ACCT 4080 Module A 9

2. Compilation & Review

(continued)    Review procedures required  written engagement letter   understanding of the client’s industry and business (but no evaluation of internal control) analytical procedures  inquiry of management  written management representations Accountant must be independent Financial statements must contain all disclosures ACCT 4080 Module A 10

Accountant’s Review Report

We have reviewed the accompanying balance sheet of Sample Company as of December 31, 2011, and the related statements of income, retained earnings, and cash flows for the year then ended. A review includes primarily applying analytical procedures to management's financial data and making inquiries of company management. A review is substantially less in scope than an audit, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion.

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America and for designing, implementing, and maintaining internal control relevant to the preparation and fair presentation of the financial statements.

Our responsibility is to conduct the review in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. The standards require us to perform procedures to obtain limited assurance that there are no material modifications that should be made to the financial statements. We believe that the results of our procedures provide a reasonable basis for our report.

Based on our review, we are not aware of any material modifications that should be made to the financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America.

ACCT 4080 Module A 11

3. Review of Interim Fin Stmts

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Review of interim financial statements

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Required for issuers by the SEC

 Reviews of interim statements follow the SASs (AU-C § 930), not SSARSs

Auditor can only perform review if

 have audited latest financial statements  or are in process of auditing latest fin stmts ACCT 4080 Module A 12

4. Attestation Engagements

   Definition of attest engagement  Report on the subject matter, or an assertion about the subject matter, that is the responsibility of another party Performed by a “practitioner” Types of services    examinations reviews agreed-upon procedures ACCT 4080 Module A 13

4. Attestation Engagements

  Levels of assurance    examination   similar to an audit high level of assurance (reasonable assurance) review   limited (moderate) level of assurance not allowed on certain engagements agreed upon procedures  assurance depends on procedures performed Applicable standards  SSAEs (AT) ACCT 4080 Module A 14

4. Attestation Engagements

 Types of attestation subject matter    Agreed Upon Procedures Engagements (AT 201)  scope less than audit   report – no opinion or negative assurance (list procedures and findings) limited use report Financial Forecasts and Projections (AT 301)   definitions limited use reports (except some forecasts can be general use report) Reporting on Pro Forma Financial Information (AT 401)  definitions  limited use reports ACCT 4080 Module A 15

4. Attestation Engagements

 Types of attestation subject matter  Reporting on an Entity’s Internal Control over Financial Reporting (AT 501)      Compliance Attestation (AT 601)  no reviews Management’s Discussion and Analysis (AT 701) Service Organizations (AT 801)   no reviews mostly same as PCAOB standards Type 1 report Type 2 report ACCT 4080 Module A 16

5. Special Reports

    Follow SASs (auditing standards) Special Purpose Framework Statements (SPF), AU-C 800    previously called OCBOA statements regulatory basis tax basis   cash basis modified cash basis Specific elements, accounts, or items in a financial statement, AU-C 805  no piecemeal reports Reporting on application of accounting principles (opinion shopping), AU-C 915 ACCT 4080 Module A 17

6. Future Services

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XBRL

ACCT 4080 Module A 18

Review Questions for Discussion

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A.3

A.5

A.6

A.7

A.9

A.13

A.12

ACCT 4080 Module A 19